Final answer:
The statement is false; a bond's 'basis' generally refers to its cost basis or a measurement unit in bond trading, whereas 'yield-to-maturity' measures the expected rate of return if a bond is held until its maturity date.
Step-by-step explanation:
False, a bond's basis is not synonymous with its yield-to-maturity. The term 'basis' often refers to the cost basis of a bond, which is the original purchase price including any commissions or fees.
Alternatively, in the context of bond trading, 'basis' can refer to the basis point, which is a unit of measure used in quoting yields, with one basis point being equal to 1/100th of 1%.
On the other hand, yield-to-maturity (YTM) incorporates not only the interest payments but also the gain or loss that will be recognized if the bond is held to maturity, as it compares the bond's market price to its face value.
The bond yield measures the rate of return a bond is expected to pay over time, while the present value of a bond is dependent on the bond's face value, coupon rate, market interest rates, and time until maturity.